Sales Of Fixed-Rate Annuities Soar In 3Q

By Cyril Tuohy

InsuranceNewsNet

Sales of fixed annuities reached $23.5 billion in the third quarter, a 31 percent increase over the year-ago period, as interest rates edged up over the summer and fixed annuities gained broader acceptance in the market, according to LIMRA.

Third-quarter sales of variable annuities were $35.9 billion, a 2 percent drop compared with the year-ago period, LIMRA also reported.

Among the family of fixed annuity products, deferred income annuities reported the highest percentage gain. Sales of deferred income annuities in the third quarter hit $550 million, an increase of 106 percent from $270 million in the year-ago quarter.

Fixed-rate deferred annuities hit $9.5 billion in the third quarter, an increase of 66 percent over the $5.7 billion sold in the year-ago period, LIMRA also reported.

Indexed annuities for the first time reached $10 billion in sales in the third quarter, up 15 percent from $8.7 billion reported in the year-ago period, LIMRA also said.

Fixed deferred annuities clocked in at $19.5 billion in the third quarter, a 35 percent increase over the year-ago quarter, LIMRA said.

“This growth was driven by improvements in the interest rate environment, increasing demand for accumulation-type annuity products,” said Joseph Montminy, assistant vice president with LIMRA Secure Retirement Institute (SRI) Annuity Research.

For the first time, sales of quarterly indexed annuities reached the $10-billion mark, and year-to-date, sales of indexed annuities are up 6 percent to $26.8 billion.

Fixed immediate annuity sales reached $2.1 billion, an increase of 5 percent over the year-ago period. LIMRA SRI also reported.

“We are seeing broader acceptance of indexed annuities across the different distribution channels,” Montminy said in a news release. Estimates are based on data from 59 companies representing 95 percent of total sales.

Banks’ market share of indexed annuities, for instance, reached 15 percent in the third quarter, up 4 percentage points compared with the year-ago period, LIMRA also reported.

The top sellers of individual fixed annuities in the third quarter were New York Life ($5 billion), Security Benefit Life ($4.3 billion), Allianz Life of North America ($3.7 billion), AIG Companies ($3.4 billion) and American Equity Investment Life ($3.1 billion).

Top sellers of individual variable annuities were Jackson National Life ($15.4 billion), Lincoln Financial Group ($10.7 billion), TIAA-CREF ($9.8 billion), Prudential Annuities ($9.0 billion) and AIG Companies ($8.9 billion).

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].